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Key Risks

The Group deploys the Enterprise Risk Management Framework (Framework) to identify the most important risks that will act as barriers to achieving its business goals in the short, medium and long term. It sets out a consistent definition of risk and risk tolerance limits to ensure that business units have a common understanding when identifying and assessing risks. Besides business risks, the Framework also analyses the financial and non-financial impact of risks arising from sustainability areas of environmental, social and governance.

 

 

Product Liability & Safety

Customers expect products and services to fulfil their intended functions satisfactorily, and not pose a risk to health and safety. The Group recognises that the risks posed by unsafe or unreliable products or services not only affect us financially; they also adversely affect our reputation. We have incorporated product safety methodologies such as systems safety in our design and development process, and they look at safety during production, safety in use, and safety during maintenance, repair and overhaul. The Group actively promotes awareness and a culture of product and services safety within the organisation and among our key suppliers. In addition, we have a comprehensive insurance programme for product and service liability.

Business Disruptions

Disruptive events can have business consequences if not appropriately managed. Such events include cyberattacks, extreme weather events, pandemics, industrial accidents or labour strikes. We recognise that quick recovery and resumption of business operations after a disruption are critical to minimise the impact and maintain public confidence. An inability to fulfil critical business obligations may result in significant financial losses or even cause contagion or systemic impact with broader disruptions to the entire business.

Besides insurance coverage which recovers certain quantifiable losses, to protect against erosion of reputation and loss of public confidence, we have in place a Business Continuity Programme that extends to cover all significant operations and facilities as well as operations and facilities of key vendors or service providers that provide us with critical services. Annually, periodic tests on our business continuity plans are carried out. The results, together with audit findings and areas for improvement are reviewed and discussed with the Risk and Sustainability Committee.

Contract Compliance

Our main business activity relates to management and execution of projects for defence and commercial customers. Risks relating to project management are therefore inherent in our business. These may include issues relating to project costs and schedules, as well as contractual and quality matters. The Group has a project review and quality assurance system in place to mitigate such risks. All contracts of material value require review by legal counsel, and significant deviations from pre-approved standard contract terms and conditions are highlighted and presented to higher levels of management for review and approval.

Regulatory Compliance

We are subject to applicable laws and regulations of various jurisdictions. We comply with these laws and regulations to maintain our licences to operate.

The Group has in place a Regulatory Compliance framework that proactively identifies applicable laws and regulatory obligations, and embeds compliance into the day-to-day business processes. Annually, a report is prepared showing performance in this area. It sets out information such as training conducted, audits and audit findings, violations, fines and penalties, if any. This report is shared at the Risk and Sustainability Committee meetings, where lessons learnt are distilled and shared.

Examples of laws and regulations which the Group deems to be of material importance include those on anti-corruption, workplace safety and health, and environment.  In addition, we are subject to strict industry related laws and regulations such as those of the aerospace and defence industries.

Our Aerospace sector implements sector-wide quality and safety management systems to ensure strict compliance with aviation laws and regulations. Our operations involved in defence place great emphasis in export control regulations and have instituted formal systems and designated personnel to ensure these regulations are strictly complied with. The Group also closely monitors changes in these laws and regulations to ensure we stay in full compliance.

Bribery & Corruption

We have zero tolerance for fraud and corrupt practices and has a framework for combating fraud and corruption. Our senior management sets the tone and promotes an anti-fraud culture throughout the Group through a set of core values and the Code of Business Conduct and Ethics. Training on the Code is compulsory for all employees and is conducted annually. Contracts with independent service providers including agents, consultants and advisers, must include anti-corruption undertakings and representations as well as acknowledgment of our Anti-Corruption Policy.

Cyber Risks

We are a major defence and government contractor providing cyber security related products and services. We hold significant information assets such as proprietary technology, processes and patents. Our reputation and competitiveness rest on our ability to prevent any breach of cybersecurity defences. Such breaches could result in theft, wilful destruction and damage of information assets, and to critical information infrastructure, all leading to possible disruptions to our business and potential litigations.

The Group implements and enforces strict controls to reduce our cyber risks exposure. In addition to our IT governance framework, we have multiple layers of cyber security defence infrastructure to detect, prevent and alert us of possible cyber attacks. We also operate a Security Operations Centre that performs proactive monitoring of cyber security threats in real-time to ensure total visibility of threat levels across the organisation at any point in time.

We conduct regular cybersecurity awareness exercises to improve the situational awareness of our employees and reduce the likelihood that they become the weak link in our defences against cyber attacks. Besides regular reviews of our controls, policies governance framework and infrastructure to ensure that they continue to be relevant to the evolving cyber security threat landscape, we work with internal and external auditors to regularly conduct end-to-end audits to ensure compliance as well as identify weaknesses in systems and processes. 

Business Continuity Plans are in place to ensure that complete recovery of information systems and assets is possible in the event of damage or loss. We conduct periodic exercises to ensure that our plans are and continue to be relevant and serve their intended purposes.

Foreign Exchange

The Group’s foreign exchange exposures are derived from the receivables and payables that are denominated in foreign currencies. These exposures arise from the business activities of the Group and are primarily in USD, EUR, GBP and some Asian currencies. These exposures are managed centrally by the Group Treasury according to guidelines set in our Foreign Exchange Management Policy. As a result of the hedges taken to manage these foreign exchange exposures, the level of volatility of the Group’s earnings has been reduced. Reports of hedged and unhedged exposures for the main foreign currencies are prepared for regular reviews with the Audit Committee.

Credit

This is the risk of non-payment by the Group’s customers and other counterparties with whom the Group deals. Our Credit Control Policy governs how credit risk in the Group is managed. It comprises a framework of credit evaluations, limit and term setting, exposures monitoring against the limits and credit limit exceedances management and approval.  Past-due receivables are closely monitored and followed up on.

Total Workplace Safety & Health

We are committed to ‘Safety Before Profit’. We recognise that good health and safety improve work effectiveness, employee morale and our reputation. To provide a safe working environment, we integrate safety measures into key business activities with detailed workplace safety and health policies. We also seek continuous improvements through proactive hazard and risk identification and constant monitoring of safety targets. We have initiated various programmes and activities to raise awareness and inculcate a safety culture in all employees. These include regular safety briefings and training sessions, health talks and recreational activities. We also encourage and recognise individuals and teams which develop innovative solutions to health and safety challenges.

Talent Management & Succession Planning

We are only as strong as our people. The recruitment and retention of qualified and experienced talents and their succession are critical to us achieving our strategic objectives. This is especially so given the deep expertise that we need to drive our businesses, and the increasingly competitive global marketplace for talent.

To stay as an employer of choice and ensure a pipeline of high performing teams, we have shaped our people and culture strategy to enhance our capability and capacity for growth, build a passionate and engaged workforce, and position us at the forefront of people practices. We realise this proposition through our practices in talent attraction and management, career development, diversity and inclusion, reward system, work-life integration and harmonious union relations.

As a Group with a global footprint, we are committed to fair employment practices worldwide and in providing a work environment that is free from discrimination or harassment of any type, where the recruitment, employment and development of people are based on qualifications, skills and competencies to do the job.

Mergers & Acquisitions

One of the avenues through which we seek to grow the Group’s businesses is the acquisition of business entities, operating assets, intellectual property or entry into joint ventures. Mergers and Acquisitions (M&A) risks include underestimating the scale, scope and work required for integration, inability to meet the projected financial performance, failure to realise synergies, loss of key personnel and the inability to meld different cultures.

A robust M&A framework has been put in place to manage the full spectrum of an M&A transaction, from screening to due diligence, approvals, integration and post-acquisition reviews. M&A activities are championed by the Business Sectors and supported by the M&A, Finance, Tax, Legal, HR and IT teams and augmented by external professional advisers for specialised services. Risks are identified by each of these work streams for review by the approving authorities. A cross-functional integration management team develops action plans to mitigate the risks identified and tracks execution. Post-acquisition progress is reported at agreed intervals to a Steering Committee comprising President & CEO, Chief Financial Officer, Chief Strategy Officer and the relevant Business Sector President to track performance against targets and to review lessons learnt. Risks and integration matters are reviewed and reported to the Risk and Sustainability Committee.

Product & Technology Obsolescence

Technology and innovation are the lifeblood of our organisation, just as they are also the backbone of sustainable cities.  This is why we are constantly investing to enhance our role as an effective enabler of a sustainable world - using technology to address the world’s most pressing problems, thereby helping our customers deal with the impact of population growth, urbanisation, climate change and many more.

In addition, we continue to collaborate extensively, which enables us to focus on our core capabilities while benefiting from the expertise of like-minded institutions and organisations that are keen to co-create and develop solutions to solve real-world challenges.

Internally, we continue to invest in our engineering capabilities and resources.  We provide different platforms that drive various innovation needs – the Engineering Design Centres for product enhancement, and Strategic Technology Centres for group-wide capabilities in areas like cybersecurity and data analytics.  Our Open Innovation Lab continues to serve as a space carved out for engineers to co-create and innovate.